How to Get Out of Debt: Step 1
If you have landed on this page you are probably ready to look at how to get out of debt, finally and forever.
Help with debt problems begins with knowing exactly where you are right now. It is crucial at this point to be very honest with yourself and your partner. Many people hide the exact amount of their bills from their spouse. Now is the time for honesty.
What Do You Owe?
To start, get out information about every debt you have - your mortgage, car loan, line of credit, credit cards, student loan, furniture and appliance loans, personal loans - any debt or loan you have outstanding.
Take a sheet of paper and list each debt. Write down what kind of debt it is (for example: mortgage, personal loan, credit card etc), the lender the money is owed to, the total amount of the debt, the interest rate you are being charged and the minimum payment you owe each month. (Click here for our handy net worth calculator and let it do the math for you!)
Total the debt owed column as well as the minimum monthly payment column. There you have it - the exact amount of debt you have in front of you and the amount it is costing you each month to carry that debt.
Your first tendency at this point may be to go into shock. After all, you probably haven't looked at it all this directly before. But the first step to get out of debt is getting real and you have taken that giant first step. So...
Don't panic, congratulate yourself!
You have just done a wonderful thing and if you continue (which we hope you will, because it is very "do-able"), you will eat away at that debt and begin to put more money in the bank. How good will that feel to get out of debt?!
What Do You Own?
The next part of our how to get out of debt plan is to itemize and list everything you own - at least everything that is larger and saleable (Don't worry. None of the steps involve selling everything you own!)
If you own a house, how much is it worth on today's property market? How much would your car(s) be worth if you sold them today? Add other large or high value items to your list - jewelry, TVs, computers and other electronics, cameras, furniture, appliances, the family silver and china, tools, the riding lawn mower, motorcycles, vacation homes, boats, ski equipment - anything of any significant value in and around your home.
Now add to the list any savings you have. That includes the money in all of your bank accounts, all of your investments including retirement savings programs and any other properties you may own.
That's it! You have just taken a snapshot of where you really are. This information is going to be very valuable for you as you continue along each step of the Debt Ditch Solution to get out of debt.
Are you beginning to feel excited about getting rid of the weight of your debt? Great! That excitement will help carry you through some of the more difficult choices you may have to make down the road.Now, for the next step in how to get out of debt, credit scores.
- Credit Scores
- What is a Credit Score?
- Free Annual Credit Report
- Get Free Credit Report
- Financial Fitness Quiz
~ Zig Ziglar
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